LEGAL FOCUS Civil Litigation with or Business Expectancy: An Overview of Virginia

BY DAVID N. ANTHONY Tortious interference with contract beyond personal service is not or business expectancy occurs when to contracts of virtually any an Essential Element of the Claim a person intentionally the type or character.4 After significant A key component of a tortious plaintiff’s contractual or other disagreement, most American courts interference with contract claim is the business relationship with a third eventually recognized the tort.5 In third party’s intent as summarized person. This tort strikes Worrie v. Boze, the Supreme Court of by a noted treatise as follows: “[i]t is a delicate balance between two ideals: Virginia first acknowledged that “the clear that liability is to be imposed the promotion of healthy economic right to performance of a contract and only if the defendant intends to competition and the protection of the right to reap profits therefrom are interfere with the plaintiff’s existing or reasonably certain property rights which are entitled to contractual relations, at least in the prospective contractual relations. protection from the courts.”6 Since sense that he acts with knowledge American contract law encourages Worrie, Virginia courts have continued that interference will result, and if, in lawful, free market competition, yet to develop the nuances of the claim, addition, he acts for an improper also recognizes that vital interests, occasionally by drawing from purpose.”9 This emphasis on intent rights and obligations worthy of analogous claims.7 occasionally misleads counsel into protection arise once a contract exists Stating a Claim for Tortious believing that that a plaintiff must between parties. If contracts are not Interference with Existing Contract prove malice in the traditional sense given protection from intentional of ill-will or spite. However, the interference by others, then the Under Virginia Law Supreme Court of Virginia has made certainty of their duration is at risk Under Virginia law, a claimant clear that actual malice is not an thereby jeopardizing the incentive to must prove at least four elements to essential element to prove a claim for do business by contract. Given these maintain a viable claim for tortious tortious interference with a competing interests, Virginia courts interference. The elements for a claim contract.10 All that is required is that routinely address disputes that differ slightly depending on whether the plaintiff demonstrate that the straddle the fine line between the basis for the claim for interference defendant intentionally engaged in vigorous, hardnosed competition and is an existing contract or prospective the conduct with the primary intentional interference with business expectancy, business purpose of interfering with the contracts or business expectancies. relationship or economic advantage. plaintiff’s existing contractual or Background Basic Elements business relationship with the third party. Tortious interference claims A plaintiff must establish four originated in early Roman law, where elements in order to state a prima facie Additional Element if the Existing the head of a household could bring cause of action for tortious Contract is Terminable at Will an action against some third party interference with an existing contract: Counsel are cautioned that, if the who injured a member of his 1. Existence of a valid contractual contract at issue is terminable “at household.1 The modern history of relationship or business expectancy; will,” a plaintiff also must establish the claim for tortious interference 2. Knowledge of the contractual that the defendant interfered through with contractual relations claims relationship or expectancy by the the use of “improper methods.”11 As traces to 19th century England.2 In defendant; the Supreme Court of Virginia has the seminal case of Lumley v. Gye, an 3. Intentional interference inducing held: English court recognized a claim or causing a breach or termination of Unlike a party to a contract for a brought by a theater owner against a the contractual relationship or definite term, however, an rival theater owner’s interference expectancy; and individual’s interest in a contract with his contract with a well-known 4. Resultant damage to the party terminable at will is essentially only singer.3 whose contractual relationship or an expectancy of future economic 8 Subsequent decisions expanded the expectancy has been disrupted. gain, and he has no legal assurance that he will realize the OCTOBER/NOVEMBER 2006 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/9 expected gain. See Restatement Existence of an Enforceable Contract merely one of several equally (Second) of § 766 comment g In the context of a claim for tortious surmisable possibilities.”32 As Prosser (1979). Thus, the cause of action interference with an existing contract, has stated, “[i]n such cases there is a for interference with contractual counsel may overlook the requirement background of business experience on rights provides no protection from 16 the basis of which it is possible to the mere intentional interference that a plaintiff must allege and prove with a contract terminable at will.12 that it was a party to a valid existing estimate with some fair amount of 17 This distinction makes logical and contract. While the existence of a success both the value of what has practical sense, as a contract valid contract is not at issue in many been lost and the likelihood that the cases, courts have identified a number plaintiff would have received it if the terminable at will may be ended at 33 any time by the parties; however, “the of circumstances where the alleged defendant had not interfered.” fact that a contract is terminable at underlying contract is not enforceable, Virginia courts have held that a the will of the parties does not make it such that the plaintiff cannot satisfy variety of asserted business terminable at the will of others.”13 this element of a tortious interference expectancies do not satisfy the Given the more tenuous nature of a claim. Examples include: requisite standard of reasonable 18 contract terminable at will,the · a contract violating a rule of law; certainty, including: Supreme Court of Virginia requires a ·a contract against the public policy · continuing to do or remaining in 19 34 plaintiff to prove more than mere of Virginia; business; · a lawfully terminated lease;20 · retroactive promotions;35 intentional interference with the at 36 will contract by a third party.14 See · a contract to which the defendant ·real sale purchase contracts; himself is a party;21 ·sales to unidentified, and infra for a fuller discussion of the meaning of 37 “improper means or methods.” · an employee’s ERISA benefits unidentifiable, “potential” buyers preempted by federal law;22 and Stating a Claim for Tortious · an unenforceable covenant not to · consulting contracts with nothing Interference with Contract compete;23 more than a hope that the business Expectancy, Prospective Business · a contract providing easement relationship would continue in the Relationship or Economic Advantage rights;24 future.38 · an assignee of a contract not a Basic Elements Knowledge of the Contract party to the contract at issue;25 and Under Virginia law, the basic or Business Expectancy elements for a claim for tortious · a non-binding letter of intent to 26 Virginia law also requires a plaintiff interference with a contract negotiate in good faith. Courts outside of Virginia have to establish that the defendant had expectancy, prospective business knowledge of either the contract or relationship or economic advantage considered the enforceability of the underlying contract within the the expectancy and of the fact that he differ slightly from those required for was interfering with the performance a claim for tortious interference with context of a tortious interference 39 claim, including violations of federal of the contract. Indeed, a court will existing contract. The elements are: dismiss a tortious interference claim 1. The existence of a contract law, , usury , the statute of , invalid where the defendant does not have expectancy, prospective business knowledge of the alleged contract.40 relationship or economic advantage; agreements, want of consideration, mutuality or certainty.27 In many circumstances, a defendant 2. Knowledge of the contract has actual knowledge of the expectancy, prospective business Existence of a Business Expectancy existence of a contract or business relationship or economic advantage with a Reasonable Certainty expectancy, and a plaintiff easily can by the defendant; of Being Realized satisfy this element. Further, at least 3. A reasonable certainty that, Where the claim involves an one Virginia trial court has set a more absent defendant’s intentional anticipated business relationship, a relaxed standard than requiring misconduct, plaintiff would have plaintiff must establish a specific actual knowledge of the potential continued in the relationship or business relationship, by allowing a realized the expectancy; opportunity that is reasonably certain to be realized in order to prove plaintiff to satisfy the knowledge 4. The defendant used improper element by proving that the means or methods to intentionally the existence of a valid business expectancy.28 Courts routinely have defendant had “knowledge of fact interfere with the contract expectancy, dismissed claims for tortious that, upon reasonable inquiry, prospective business relationships and interference with business expectancy should lead to disclosure of the economic advantage; and 15 where the plaintiff merely alleges, in existence of the contract or potential 5. Resultant damage to the plaintiff. 41 general terms, that a defendant has business relationship.” However, Proving a Claim interfered with potential or hoped- the knowledge requirement does not for Tortious Interference for29 business opportunities rather mean that the defendant must Regardless of whether a claim is than a particular business expectancy appreciate fully the legal significance or relationship.30 Instead, a plaintiff of the facts giving rise to the one for tortious interference with an 42 existing contract or tortious interference must prove the existence of the alleged contractual relationship. with business expectancy, many of the business expectancy “based upon Intentional Interference something that is a concrete move in elements and necessary proof are by the Defendant that direction”31 or “at least a substantially the same. The plaintiff also must show the reasonable probability rather than 10/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL OCTOBER/NOVEMBER 2006 defendant, through his conduct, intended to interfere with the ABOUT THE AUTHOR plaintiff’s contract or expectancy. David N. Anthony is a partner in the law firm of Kaufman & Canoles, P.C., in Richmond. He Case law in Virginia has not provided earned his law degree from Washington & Lee University School of Law in 1990. Upon a thorough analysis of what graduation, he clerked for the Hon. William T. Prince, Magistrate Judge, U.S. District Court constitutes “interference.” Generally, for the Eastern District of Virginia, Norfolk Division. In 2001, he served as Chair of the VBA a plaintiff simply must show some Young Lawyers Division, and Mr. Anthony currently chairs the VBA Civil Litigation Section . type of intentional43 act or conduct His civil litigation practice concentrates on commercial, consumer and construction by the defendant,44 as not every disputes in federal and state courts. interference is actionable.45 The Restatement (Second) of Torts has noted speculation, and into the realm of . . . we have also identified actions that: legitimate inference.’”51 Significantly, as improper which are not There is no technical requirement themselves tortious or illegal, as to the kind of conduct that may the improper conduct must have been intended to cause the interference such as unfair competition or result in interference with the third unethical conduct. . . . Nor does party’s performance of the with the plaintiff’s contract 52 the name given the cause of contract. The interference is often expectancy. action impart a requirement of by inducement. The inducement Improper Means or Methods independently tortious acts. may be any conduct conveying to ‘Tortious interference’ means the third person the actor’s desire When dealing with an “at will” or expectancy case, the Supreme Court only that the interference was to influence him not to deal with intentional and improper under the other. Thus it may be a simple of Virginia requires a plaintiff also to the circumstances, not that the request or persuasion exerting prove the additional element that the ‘improper methods’ used were only moral pressure. Or it may be interference occurred through inherently illegal or tortious.55 a statement unaccompanied by “improper means or methods.”53 Given this broad standard, Virginia any specific request but having the Indeed, intentional interference courts have identified a number of same effect as if the request were claims commonly hinge on the examples of what conduct may or may specifically made. Or it may be a question of whether the defendant not constitute “improper means or threat by the actor of physical or methods.” economic harm to the third person used “improper means or methods” or to persons in whose welfare he while interfering with the contract is interested. Or it may be the or expectancy at issue. of defamation that might promise of a benefit to the third “Improper Means or Methods” not rise to the level of an actionable person if he will refrain from 46 Discussed in the Restatement tort is sufficient to create a jury issue dealing with the other. 56 (Second) of Torts with respect to improper methods. Examples of interference include Similarly, specific allegations of threats, economic coercion, persuasion The Restatement (Second) of Torts sets forth a helpful list of certain factors to defamatory statements are sufficient based on mutual interests, a more to withstand a demurrer.57 Improper attractive contract, false statements, consider in determining whether the conduct of a defendant who interferes methods, however, do not include defamation, physical violence, unfair stating true facts regarding a competition, intimidation, unfair with a contract or prospective contractual relation is “improper.” competitor or competing markets to competition, bribery and constitutional customers.58 violations.47 However, Virginia law These factors include: “(a) the nature does not require that the conduct of the actor’s conduct, (b) the actor’s Misuse of Inside constituting interference rise to the motive, (c) the interests of the other or Confidential Information level of an independent tort.48 with which the actor’s conduct Improper methods may include interferes, (d) the interests sought to Causation misappropriation of client information be advanced by the actor, (e) the social or trade secrets.59 However, where there As with any other tort, a plaintiff interests in protecting the freedom of is no non-compete or confidentiality must prove proximate causation in action of the actor and contractual covenant between a company and its order to recover for a claim for interests of the other, (f) the proximity 49 former employees, the Court has held tortious interference. Virginia law or remoteness of the actor’s conduct that former employees are not using defines “” as “that to the interference and (g) the relations improper methods when they 54 act or omission which, in natural and between the parties.” compile from memory a list of the continuous sequence, unbroken by an What Are and Are Not company’s clients and solicit their efficient , produces business.60 the event, and without which that “Improper Means or Methods” event would not have occurred.”50 Under Virginia Law Violations of Established Standard The Supreme Court of Virginia has In describing generally what does of a Trade or Profession clarified that “[b]efore the issue of and does not constitute “improper Improper methods also may be proximate cause may be properly means or methods,” the Supreme established by a showing that the submitted to the jury, however, the Court of Virginia has stated that: defendant’s actions “violate an evidence proving a causal connection While we have identified actions established standard of a trade or must be ‘sufficient to take the question as improper which were also profession.”61 The investigation and independently tortious or illegal, out of the realm of mere conjecture, or review of a debtor’s credit and loan OCTOBER/NOVEMBER 2006 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/11 information by a purchaser of credit from those customers;73 and Court of Virginia has recognized is a “lawful acquisition of information · Exercise of a lawful right such as a justification or privilege as an necessary for sound business bank’s foreclosure on its UCC lien on a affirmative defense to tortious decisions” and not considered a debtor’s property after the debtor had interference claims.86 In Chaves v. tortious act.62 arranged a sale to a third party74 or Johnson, the Court provided five termination of agreement as provided grounds for this affirmative defense: Unethical Conduct for by its plain terms.75 · Legitimate business competition; The Supreme Court of Virginia has Resultant Damage to the Plaintiff · Financial interest; stated that methods may also be · Responsibility for the welfare of improper because they involve Compensatory Damages another; “unethical conduct,” although the As with any other claim, the · Directing business policy; and Court has not provided detailed plaintiff must prove that it sustained 87 76 · The giving or requested advice. guidance as to what types of unethical damages from the alleged interference. Generally, however, the Supreme conduct will rise to the level of being Since tortious interference is an 63 Court of Virginia has not provided deemed “improper” in this context. economic tort, a plaintiff potentially its own extensive, independent Litigation Initiated may recover monetary damages in analysis of the type of conduct that the form of: (1) the plaintiff’s direct for the Wrong Reasons would qualify as “justified” or expenses;77 (2) lost profits;78 (3) Evidence of conduct otherwise “privileged” activity in the context of damages for partially completed permitted by statute – such as the this affirmative defense, instead citing projects; (4) contracts that had been initiation of litigation – may still be generally to the discussion of this awarded but no work performed; (5) considered improper for purposes of defense set forth in the Restatement. As future contracts that had been a tortious interference claim.64 with any affirmative defense, the promised but not awarded; (6) However, when a defendant acts in burden of proof rests on the defendant permanent destruction of the accordance with published court to prove that its interference was business relationship; and (7) damage decisions and engages in conduct that 79 justified or privileged under the to the plaintiff’s business reputation. 88 is encouraged by federal law, such circumstances. While a plaintiff must provide actions cannot establish the basis for sufficient facts and circumstances Conclusion improper methods of interference.65 concerning his damages, a plaintiff Ordinarily, disputes involving Other Examples need not prove his compensatory commercial transactions do not give of “Improper Methods or Means” damages to an exact amount.80 rise to any type of tort claim under In Duggin v. Adams,66 the Supreme However, a plaintiff must demonstrate Virginia law. However, Virginia Court of Virginia delineated with reasonable certainty that the courts have demonstrated a numerous other examples of conduct defendant was the proximate cause willingness to protect the sanctity of by a defendant that may constitute of each claimed damage.81 contracts, in part, through the improper methods, including: doctrine of tortious interference with Punitive Damages contracts. This willingness does not ·Means that are illegal or As with other torts, punitive independently tortious, such as mean that a Virginia court will allow damages are an available remedy every commercial dispute between violations of statutes, regulations or provided the plaintiff can prove that recognized common law rules;67 business competitors to be turned the defendant willfully interfered into a business tort. Thus, Virginia ·Violence, threats or intimidation; with or destroyed the business ·Bribery; 82 courts afford existing contracts that relationship. However, the defendant’s are not terminable at will a greater ·Unfounded litigation; conduct must be particularly 68 69 degree of protection than terminable ·, misrepresentation or “egregious.”83 The plaintiff must show deceit; at will contracts or prospective that the defendant acted with actual contractual relationships that are · Duress or undue influence; malice or such recklessness or 70 only tentative. Further, the Supreme ·Breach of a fiduciary relationship; to evince a conscious ·Sharp dealing and overreaching; 84 Court of Virginia in Duggin and disregard of the rights of others. The Maximus made clear that, where the and standard to recover punitive · Unfair competition.71 claim involves interference with a damages is a high one, and plaintiffs contract that is terminable at will, or Examples of Methods or Means should not assume that a court will a future business expectancy, the That Are Not “Improper” view defendant’s actions as being plaintiff must demonstrate that the Virginia courts also have sufficiently egregious to justify an defendant used “improper means or determined that some methods or award of punitive damages merely 85 methods.” This element may be the means are not “improper” as a matter because they were intentional. most difficult for a plaintiff to of law, and thereby fail to satisfy this Defenses to Tortious establish, and Virginia case law has element, including: Interference Claims demonstrated that cases involving a · Interference occurring after terminable at will contract or 72 In acknowledgment of the tension termination of the contract; between the protection of contractual interference with a prospective · Utilizing one’s memory to compile relations or business expectancies contractual relationship will survive a list of the names of the plaintiff’s with the defendant’s freedom of fair or fail based upon whether the customers and soliciting business and lawful competition, the Supreme defendant used “improper methods” 12/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL OCTOBER/NOVEMBER 2006 to interfere. Since what conduct required by its terms); Prof’l Heating & Cooling, Inc. v. 767 F. Supp. 1335, 1340 (E.D. Va. 1991) (citing Smith, 64 Va. Cir. 313 (City of Norfolk 2004) (ruling Glass v. Glass); Levine v. McLesky, 881 F. Supp. actually constitutes “improper means that plaintiff had to demonstrate improper methods 1030, 1057 (E.D. Va. 1995) (concluding that “the or methods” is fact driven and because preventive maintenance contracts were expectancy of remaining in business is too general to constantly evolving, lawyers can terminable at will); Instruction 40.150, II Va. Model support a tortious interference claim”), aff’d in part, expect to see many more cases reach Jury Instructions (setting forth the elements a verdict rev’d in part, 164 F.3d 210 (4th Cir. 1998). must be based upon to recover for tortious interference 29. Commercial Bus. Sys., Inc. v. Halifax Corp., 253 the Supreme Court of Virginia on with a contract terminable at will). Va. 292, 301, 484 S.E.2d 892, 897 (1997) (ruling precisely this issue. VBA 13. Duggin, 234 Va. at 226, 360 S.E.2d at 836 that “mere proof of a plaintiff’s belief and hope that a (citing Truax v. Raich, 239 U.S. 33, 38 (1915)). business relationship will continue is inadequate to NOTES 14. Duggin, 234 Va. at 226-27, 360 S.E.2d at 836; sustain the cause of action”). 1. See W. Page Keeton, Prosser & Keaton On The see also Maximus, 254 Va. at 414, 493 S.E.2d at 30. See RFE Indus., Inc. v. SPM Corp., 105 F.3d Law Of Torts § 129, at 970-80 (5th ed. 1984) 378 (noting that “not all business relationships are 923, 927 (4th Cir. 1997) (concluding that plaintiff’s (observing that the status or relation in which the entitled to the same level of protection and . . . that a selling products on an as-needed basis to its parties stood toward one another and with which the contract not terminable at will was entitled to more customers with no firm commitment for future defendant interfered was the focus, rather than the protection than a contract terminable at will”) (citing purchases only provided plaintiff with an expectation existence of a contract, as the theory was that the Duggin). that it “would retain its customers only so long as it head of the household’s wife, children, slaves or 15. Maximus, 254 Va. at 414, 493 S.E.2d at 378; met their demand for a quality product at a competitive other members of his establishment were so accord Williams v. Dominion Tech. Partners, L.L.C., price”); Eurotech, Inc. v. Cosmos European Travels associated with him as to constitute a wrong against 265 Va. 280, 289-90, 576 S.E.2d 752, 757 (2003) Aktiengesellschaft, 189 F. Supp. 2d 385, 391 (E.D. the head of the household) (hereinafter, “Prosser”). (quoting Glass v. Glass, 228 Va. 39, 51-52, 321 Va. 2002) (holding that “[b]ecause plaintiffs do not 2. Restatement (Second) of Torts § 766, at 8-9 S.E.2d 69, 76-77 (1984)). identify the specific business relationships with which (1979). 16. See Masco Contractor Servs. E., Inc. v. Beals, defendant has interfered, plaintiffs’ tortious interference 3. 2 El. & Bl. 216, 118 Eng. Rep. 749 (Q.B. 1853); 279 F. Supp. 2d 699, 710 (E.D. Va. 2003) (dismissing claim fails”); see also Levine, 881 F. Supp. at 1057- see generally Tortious Interference With Contractual tortious interference counterclaim in ruling that “[t]he 58 (finding insufficient plaintiff’s contention that its Relations In The Nineteenth Century: The counterclaim makes absolutely no mention of any members expects to renew their memberships was Transformation of Property, Contract, And Tort, 93 particular contract” or existing business relationship); specific enough); McDonald’s Corp. v. Turner-James, Harv. L. Rev. 1510 (1980). accord Commerce Funding Corp. v. Worldwide Sec. No. 05-804, 2005 U.S. Dist. LEXIS 42755, at *13 4. Restatement (Second) of Torts § 766 at 9; Servs. Corp., 249 F.3d 204, 213 (4th Cir. 2001); (E.D. Va. Nov. 29, 2005) (ruling that “merely identifying Prosser § 129, at 980-81. see also Cranor v. Homebuyers Inspections, Inc., 69 the parties with whom Defendants had discussions in 5. Prosser § 129, at 980-81. Va. Cir. 10, 11 (City of Richmond 2005) (ruling that ‘several telephone calls’ about ‘various aspect of the 6. 198 Va. 533, 536, 95 S.E.2d 192, 196 (1956) plaintiff sufficiently alleged the elements of a tortious restaurant and its operations’ . . . would still fall far (holding that “under these allegations, the wrong interference claim). short of what they must allege to proceed with their done and damage done are directed to the estate or 17. Sunsport, Inc. v. Barclay Ltd., 984 F. Supp. 418, claims”); Williams, 265 Va. at 292, 576 S.E.2d at property of the plaintiffs and not to them personally”) 423 (E.D. Va. 1997). 758 (quoting Commercial Bus. Sys., Inc., 253 Va. at (citations omitted). 18. Marina Shores, Ltd. v. Cohn-Phillips, Ltd., 246 303, 484 S.E.2d at 898). 7. See Watson v. Lee Bank & Trust Co., 22 Va. Cir. Va. 222, 226, 435 S.E.2d 136, 138 (1993) (citing 31. Moore v. United Int’l Investigative Servs., Inc., 495, 505 (County of Lee May 7, 1982) (noting that Winn v. Aleda Constr. Co., 227 Va. 304, 307, 315 209 F. Supp. 2d 611, 619-20 (E.D. Va. 2002). “Virginia does not appear to have developed a well- S.E.2d 193, 194 (1984). 32. Charleston Area Med. Ctr., Inc. v. Blue Cross & defined body of law for tortious interference with 19. Marina Shores, Ltd., 246 Va. at 226, 435 Blue Shield Mut. of Ohio, Inc., 6 F.3d 243, 247 (4th contractual or business relations, the most analogous S.E.2d at 138 (citation omitted). Cir. 1993); Levine, 881 F. Supp. at 1058. cases being to induce 20. Id. 33. Prosser § 130, at 1006. or misrepresentations or fraud or deceit or libel or 21. Fox v. Deese, 234 Va. 412, 427, 362 S.E.2d 34. Levine, 881 F. Supp. at 1058; Am. Tel. & Tel. slander which results in breaches of contract or tend 699, 708 (1987); see also Hatten v. Campbell, No. Co., 767 F. Supp. at 1340. to injure others in their trade or business.”) (citing CL06-259, 2006 Va. Cir. LEXIS 118, at *10 (County 35. Morris v. Massingill, 64 Va. Cir. 202, 203 (City of Worrie and M. Rosenberg & Sons v. Craft, 182 Va. of Chesterfield Circuit Ct. June 5, 2006) (holding that Norfolk 2004). 512, 29 S.E.2d 375 (1944)). “a person cannot intentionally interfere with his own 36. French v. Garraghty, Case No. CH05-1285, 8. Chaves v. Johnson, 230 Va. 112, 120, 335 contract”); Britt Constr., Inc. v. Magazzine Clean, 2006 Va. Cir. LEXIS 125, at *3 (City of Richmond S.E.2d 97, 102 (1985); see also Instruction 40.150, L.L.C., 69 Va. Cir. 478, 480 (County of Loudoun Circuit Ct. June 1, 2006). II Va. Model Jury Instructions (setting forth the 2006) (holding that the general contractor’s allegations 37. McDonalds Corp. v. Turner-James, No. 05-804, elements a verdict must be based upon to recover for sufficiently stated an action for tortious interference 2005 U.S. Dist. LEXIS 42755, at **12-14. tortious interference with a contract that is not despite the architect’s agency relationship with the 38. Williams, 265 Va. 292, 576 S.E.2d at 758; see terminable at will). owner based upon the contractually expressed also Simbeck, 44 Va. Cir. at 62 (observing that “the 9. Prosser § 129, at 982. limitation upon the nature of the architect company’s business expectancy of a renewal insurance policy 10. Chaves, 230 Va. at 121, 335 S.E.2d at 102-03; relationship with the owner). was on the outer reaches of the concept of a cognizable see also Maximus, Inc. v. Lockheed Info. Mgmt. Sys. 22. Smith v. Logan, 363 F.Supp.2d 804, 813 (E.D. business expectancy”). Co., 254 Va. 408, 414, 493 S.E.2d 375, 378 Va. 2004). 39. Glass, 228 Va. at 51-52, 321 S.E.2d at 77. (1997) (holding that plaintiff was not required to 23. Power Distrib. v. Emergency Power Eng’g, 569 40. Meadow Ltd. P’ship v. Heritage Sav. & Loan prove malice or other egregious conduct in order to F. Supp. 54, 56 (E.D. Va. 1983). Ass’n., 639 F. Supp. 643, 651 (E.D. Va. 1986). prove its tortious interference claim); Simbeck, Inc. v. 24. Ortiz v. Flattery, 63 Va. Cir. 309, 312 (County of 41. Simbeck, Inc., 44 Va. Cir. at 62 (citing Dodd-Sisk Whitlock Corp., 44 Va. Cir. 54, 65 (City of Fairfax 2003). Restatement (Second) of Torts § 766, comment i). Winchester 1997) (stating that “proof of actual malice 25. Sunsport, Inc., 984 F. Supp. at 423. 42. Restatement (Second) of Torts § 766 comment or ill will is not necessary in order to recover for 26. Marketplace Holdings, Inc. v. Camellia Food i. tortious interference with an existing contract that is Stores, Inc., At Law No. L03-2601 (City of Norfolk 43. See John L. Costello, Virginia Remedies § not terminable at will”), aff’d, 257 Va. 53, 508 Circuit Ct. Feb. 27, 2004). 17A.02[5][a], at 17A-20 (3d ed. 2005) (noting that S.E.2d 601 (1999); Prosser § 129, at 982-89 27. See James D. Pearson, Annot., Liability for no independent tort exists in Virginia for the negligent (discussing intent requirement). Interference with Invalid or Unenforceable Contract, interference with contract). 11. Duggin v. Adams, 234 Va. 221, 227-28, 360 96 A.L.R.3d 1294 (1979) (discussing examples in a 44. Duggin, 234 Va. at 226, 360 S.E.2d at 835. S.E.2d 832, 836 (1987); wide variety of states throughout the United States); 45. Nida v. Bus. Advisory Sys., Inc., 44 Va. Cir. 487, 12. Id. at 226, 360 S.E.2d at 836 (citing Hechler see also Restatement (Second) of Torts § 766 501 (City of Winchester 1998) (holding that “the fact Chevrolet v. Gen. Motors Corp., 230 Va. 396, 402, comment f (stating that a third party is not free to that defendant’s activity has injured plaintiff’s business 337 S.E.2d 744, 748 (1985)); accord Rappahannock interfere with the performance of a contract even the does not mean that plaintiff necessarily is entitled to Pistol & Rifle Club, Inc. v. Bennett, 262 Va. 5, 546 if the third party may have a technical defense to a remedy” as “[a]n injury may be of the kind which, in S.E.2d 440 (2001); see also George K. Degnon avoid liability, such as “the statute of frauds, formal a relatively free economy, a citizen is obliged to suffer, Assocs. v. Acad. for Eating Disorders, Law No. defects, lack of mutuality, infancy, unconscionable an injury resulting from lawful competition of which he 227768, 2005 Va. Cir. LEXIS 202 (County of Fairfax provisions, conditions precedent to the obligation or cannot complain.”). Circuit Ct. Nov. 29, 2005) (holding that three year even uncertainty of particular terms”). 46. Restatement (Second) of Torts § 766, comment contract was not terminable at will because defendant 28. See Am. Tel. & Tel. Co. v. E. Pay Phones, Inc., k. did not give notice to terminate the contract as OCTOBER/NOVEMBER 2006 THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL/13 47. Prosser § 129, at 90-94 (citations omitted). at will sales contract and plaintiff was entitled to performance constituted improper conduct). 48. See Maximus, 254 Va. at 414-15 n.7, 493 use general information, including customer 70. See Hilb, Rogal & Hamilton Co. v. DePew, S.E.2d at 378-79; accord Prosser § 129, at 993; names to begin a new business so long as 247 Va. 240, 249, 440 S.E.2d 918, 923 (1994) see also Virginia Remedies § 17A.02[5], at 17A- information was not acquired in violation of their (holding that breach of a fiduciary relationship is 20 (stating that "[t]he methods of interference duties as agents); Deepwood Veterinary Clinic, evidence of the required improper methods. The need not be tortious themselves"). Inc. v. Sabo, 45 Va. Cir. 508, 509 (County of court, however found that post-termination 49. Chaves, 230 Va. at 120, 335 S.E.2d at 102. Fairfax 1998) (holding that solicitation of activities were not a violation of a fiduciary duty 50. Beale v. Jones, 210 Va. 519, 522, 171 customers through use of list compiled by memory said to have been owed by a former employee to S.E.2d 851, 853 (1970); Instruction 5.000, I Va. was not actionable absent a covenant not a former employer); Appleton v. Bondurant & Model Jury Instructions. compete or improper methods). Appleton, P.C., 68 Va. Cir. 208 (City of Portsmouth 51. Cohn v. Knowledge Connections, Inc., 266 61. Duggin, 234 Va. at 228, 360 S.E.2d at 837; 2005) (holding that breach of a fiduciary duty Va. 362, 369, 585 S.E.2d 578, 582 (2003) see Simbeck, 257 Va. at 57, 508 S.E.2d at 603 would be the basis for improper methods, (quoting Beale, 210 Va. at 522, 171 S.E.2d at (holding that defendant's attempt to recoup however, the former employees did not commit 853 and Hawkins v. Beecham, 168 Va. 553, money owed by plaintiff by refusing to release an a breach of their fiduciary duties). 561, 191 S.E. 640, 643 (1937)). insurance quote unless plaintiff executed a note 71. Duggin, 234 Va. at 227-28, 360 S.E.2d at 52. Magnuson v. Peak Tech. Servs., Inc., 808 F. was a deviation of established custom and 836 (citations omitted). Supp. 500, 516-17 (E.D. Va. 1992); see also practice in the trucking insurance industry and 72. Perk v. Vector Res. Group, 253 Va. 310, Restatement (Second) of Torts § 766, comment "totally improper"). 313, 485 S.E.2d 140, 143 (1997). h (stating that "[t]he essential thing is the intent 62. Peterson v. Cooley, 142 F.3d 181, 187 (4th 73. Peace, 246 Va. at 282, 435 Va. at 135. to cause the result. If the actor does not have Cir. 1998). 74. Charles E. Brauer Co. v. NationsBank of Va., this intent, his conduct does not subject him to 63. Duggin, 234 Va. at 228, 360 S.E.2d at 836; N.A., 251 Va. 28, 36, 466 S.E.2d 382, 387 liability under this rule even if it has the Wuchenich v. Shenandoah Mem'l Hosp., No. 99- (1996). unintended effect of deterring the third person 1273, 2000 U.S. App. LEXIS 11557 (4th Cir. May 75. R&D 2001, L.L.C. v. Collins, No. Cl-2005- from dealing with the other."). 22, 2000) (suspending plaintiff's medical staff 7021 2006 Va. Cir. LEXIS 131 (County of Fairfax 53. Duggin, 234 Va. at 227-28, 360 S.E.2d at privileges without just cause and reporting two of Circuit Ct. July 12, 2006). 836. plaintiff's cases to peer review without just cause 76. Masco Contractor Servs. E., 279 F. Supp. 2d 54. Restatement (Second) of Torts § 767, at 26- constitute unethical conduct and improper at 709. 39; see also Belena v. Air Line Pilots' Assn., 31 methods); Commerce Funding Corp. v. Worldwide 77. Simbeck, 44 Va. Cir. at 63 (citing Bettius & Va. Cir. 413, 415-16 (County of Fairfax Sept. 1, Sec. Servs., 249 F.3d 204, 214 (4th Cir. 2001) Sanderson, P.C. v. Nat'l Fire Ins. Co., 839 F.2d 1993) (citing Restatement (Second) of Torts § (holding that the conduct of a party who, based 1009, 1012 (4th Cir. 1988)). 167). on good faith belief, asserted claims to funds in 78. See Hop-In Food Stores, Inc. v. Serv-N-Save, 55. Maximus, Inc., 254 Va. at 414, 493 S.E.2d an interpleader action in which it had no legal Inc., 247 Va. 187, 190-91, 440 S.E.2d 606, 608 at 378 (citing Duggin, 234 Va. at 227-28, 360 interest was not considered unethical or on the (1994) (holding that a plaintiff may recover lost S.E.2d at 836-37) (footnote omitted). level of improper conduct). profits proximately caused by the defendant's 56. Stamathis v. Flying J., Inc., No. 7:01cv00838, 64. See Maximus, 254 Va. at 414-15, 493 S.E.2d wrongful conduct "provided the lost profits are 2002 U.S. Dist. LEXIS 12398 (W.D. Va. July 9, at 378-79 (evidence that defendant filed a protest capable of reasonable ascertainment and are 2002); see also Douty v. Irwin Mortgage Corp., to a government agency's Notice of Intent to not uncertain, speculative, or remote") (citing 70 F. Supp. 2d 626, 634 (E.D. Va. 1999) (holding Award a contract to the plaintiff in which United Constr. Workers v. Laburnum Constr. that plaintiff's allegations, while extremely vague, defendant alleged that two members of the Corp., 194 Va. 872, 887, 75 S.E.2d 694, 704 were sufficient to satisfy the "improper means" agency's proposal evaluation panel had (1953), aff'd, 347 U.S. 656 (1954); see also requirement). undisclosed conflicts of interest — allegations Boggs v. Duncan, 202 Va. 877, 883, 121 S.E.2d 57. Eslami v. Global One Commc'ns, Inc., 48 Va. which caused the agency to withdraw the NIA for 359, 363 (1961) (requiring a plaintiff to provide Cir. 17, 24 (County of Fairfax 1999). fear of a delay in proceedings and public criticism, sufficient evidence to estimate lost profits with 58. See Hechler Chevrolet, 230 Va. at 402, 337 and which proved to be false — was sufficient to reasonable certainty); Va. Code Ann. § 8.01-221.1 S.E.2d at 748 ("If a competitor is in fact about to present a prima facie case that defendant's (allowing new or unestablished businesses to cease marketing a competing product, it is not actions were improper, despite the fact that recover lost profits upon proper proof). unlawful to state that fact truthfully to defendant had a statutory right to file a protest). 79. United Constr. Workers, 194 Va. at 887-93, customers"); see also Bridge Tech. Corp. v. Kenjya 65. See Am. Online v. GreatDeals.net, 49 F. 75 S.E.2d at 704-08. Group, Inc., 65 Va. Cir. 23, 28 (County of Fairfax Supp. 2d 851, 863-64 (E.D. Va. 1999) (holding 80. Murray v. Hadid, 238 Va. 722, 731, 385 2004) (holding that contractor's alleged that AOL had a right to prevent to chattels S.E.2d 898, 904 (1989); see also Worrie, 198 defamatory remarks to the N.S.A. could not be by blocking plaintiff's transmission of unsolicited Va. at 542, 95 S.E.2d at 200 (stating that a the basis of a civil conspiracy claim because they bulk e-mail, which is encouraged by federal law, plaintiff does not to prove the quantum of its are privileged). to its subscribers). damages with absolute certainty). 59. See McGladrey & Pullen, L.L.P. v. Shrader, 66. Duggin, 234 Va. at 227, 360 S.E.2d at 835 81. See MicroStrategy, Inc. v. Bus. Objects, S.A., 62 Va. Cir. 401, 412 (County of Rockingham (citations omitted). 429 F.3d 1344, 1361 (Fed. Cir. 2005) (finding 2003) (given the confidentiality and non- 67. See Multi-Channel TV Cable Co. v. Charlottesville that plaintiff "MicroStrategy did not account for solicitation agreement signed by defendant, his Quality Cable Corp, 31 Va. Cir. 551, 552-53 (City other potential causes for its loss of business employer "had a reasonable expectancy" that of Charlottesville 1992) (plaintiff claimed that and [defendant] Business Objects' gain in defendant would not "purloin[] confidential client Adelphia's violation of statute was improper business over the same period"). information . . . and us[e] it . . . to solicit [the methods). 82. United Constr. Workers, 194 Va. at 894, 75 employer's] clients"); Int'l Paper Co. v. Gilliam, 63 68. See Williams v. Omana, 18 Va. Cir. 165, 167 S.E.2d at 708. Va. Cir. 485, 492 (City of Roanoke 2003) (County of Fairfax 1989) (holding that a fraudulent 83. Ross v. Sigley, No. 96-00129-H, 1998 U.S. (involving an alleged violation of a confidentiality conveyance is an improper method). While fraud Dist. LEXIS 3300, at *4 (E.D. Va. Jan. 30, 1998). agreement and misappropriation of a trade secret); may serve as an "improper method," the Supreme 84. Puent v. Dickens, 245 Va. 217, 219, 427 Stone Castle Fin. v. Friedman, Billings, Ramsey Court of Virginia has refused to address fraud S.E.2d 340, 342 (1993). & Co., 191 F. Supp. 2d 652, 660 (E.D. Va. 2002) within the context of a Pastor's tortious 85. See Simbeck, 44 Va. Cir. at 65 (nothing the (alleged breach of confidentiality agreement). interference claim against officials of his church "lesser scienter requirement for proof of the tort 60. See Check 'n Go of Va. Inc. v. Laserre, No. for termination of his employment. See Cha v. is not to be confused with the concepts of 'malice' 6:04-CV-00050, 2005 U.S. Dist. LEXIS 16591 Korean Presbyterian Church of Washington, 262 and 'wanton' conduct which are the underlying (W.D. Va. Aug. 9, 2005) (plaintiff was able to Va. 604, 613-14, 553 S.E.2d 511, 515-16 justification for an award of punitive damages"). prove a misappropriation of trade secrets by a (2001). The Court reasoned that "the court could 86. Chaves, 230 Va. at 121, 335 S.E.2d at 103. former employee who took plaintiff's policy and not adjudicate such claim without considering 87. Id. (citing Restatement (Second) of Torts §§ procedure manual for development of a similar issues regarding the church's governance, faith 768-72 and Calbom v. Knudtzon, 396 P.2d 148, manual for a competitor); Peace v. Conway, 246 and doctrine." Id. at 613 n.1, 553 S.E.2d at 515. 151 (Wash. 1964)). Va. 278, 282, 435 S.E.2d 133, 135 (1993) (ruling 69. See Magnuson, 808 F. Supp. at 516-17 88. Commerce Funding Corp., 249 F.3d at 210 that plaintiff had to demonstrate defendant used (concluding that false statements regarding work (citing Chaves, 230 Va. at 121, 335 S.E.2d at improper methods to interfere with a terminable 103)). 14/THE VIRGINIA BAR ASSOCIATION NEWS JOURNAL OCTOBER/NOVEMBER 2006